Gas producers open up in joining leak study

Updated 11:22 pm, Friday, October 12, 2012

After months of insistence from natural gas producers that methane leaks are not a concern, nine energy companies are supporting research that may prove the opposite.

The move could signal a more head-on approach from the industry to tackling public concern over oil field operations.

The companies, including some of the largest natural gas producers in North America, announced earlier this week that they're joining with the Environmental Defense Fund to support a University of Texas study of methane leaks at well sites.

Natural gas is attracting keen interest as a plentiful, cleaner-burning alternative to other fossil fuels that now power most transportation.

But methane, a potent greenhouse gas that is the dominant component of natural gas, has drawn scrutiny from environmental groups because of possible leakage at drilling and storage sites.

If leakage occurs at a high enough rate before it even is burned, it could make natural gas a bigger factor in climate change than gasoline or diesel, environmentalists say.

Proactive stance

The companies' support of the first significant effort to measure methane emissions at drill sites is markedly more proactive than the industry's efforts to respond to initial public outcry over hydraulic fracturing and other advanced techniques that have launched a boom in natural gas production.

That reluctance to offer scientific measurements and data about their fracturing operations heightened public concern and frustration, culminating in a ban on the practice in Vermont and moratoriums in Maryland, New York, New Jersey and various communities nationwide, said Amy Mall, senior policy analyst for the National Resources Defense Council.

"Basically communities feel like they're guinea pigs and that's why they're so concerned," Mall said. She expects skepticism will continue "until we have science and communities understand what the impacts are on their health and their environments."

Executives from many of the largest oil and gas producers have criticized those in their own industry over the last year for previously being lax in addressing those concerns. At conferences and meetings, they have urged their peers to be more assertive in order to better explain their drilling operations and head off opposition.

The industry has become a strong proponent of disclosure of most materials used in fracturing through the website fracfocus.org, and participation in the methane study could help avoid the kind of backlash that arose from fracturing.

"This is a case where we are trying to respond to some of the comments regarding the oil and gas industry specifically in the area of gas shale production," said Jim Bolander, senior vice president of resource development for Southwestern Energy, one of the gas producers supporting the study.

Southwestern, Anadarko Petroleum Corp., BG Group plc, Chevron, Encana, Pioneer Natural Resources, Shell Oil, Talisman Energy USA, Exxon Mobil's XTO Energy subsidiary, and the Environmental Defense Fund are all contributing an equal amount of funding to the UT study. The producers are also providing access to their well sites so that researchers can measure methane emissions rates.

"We think it's a great opportunity to look at this topic from a very fact-based, scientific perspective," said Kelly op de Weegh, a spokeswoman for Shell. "So, for example, this will not be looking at modeling. It will actually be gathering data."

A study published in the Proceedings of the National Academy of Sciences estimated that a "well-to-wheels" methane leak rate of less than 1 percent would give immediate climate benefits in vehicles switching from other fossil fuels to natural gas. But the study had to estimate current leak rates during production, processing, transportation, storage and refueling, since no concrete data is available. It estimated that leak rates are around 3 percent.

Increased understanding of leaks could bring financial benefits for producers, who have faced low natural gas prices, said Andrew Coleman, an analyst for Raymond James. "The view is every single hydrocarbon that gets released doesn't get sold - given where gas prices have gone, no one wants to waste any gas because there just aren't enough dollars to go around," Coleman said.

But even getting to that gas could become a problem if concerns about issues like methane leakage aren't addressed, he said. "The industry has to go and make sure that people can become comfortable with what the industry is doing, so that it doesn't throw up roadblocks," Coleman said.